The European Ministers of Finance (ECOFIN) decided on March 16 2010 new rules to harmonize and simplify the European VAT invoicing rules. The draft proposal is alleged to have missed a historic opportunity for a breakthrough of cross border e-invoicing in Europe.
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Beginning in 2009, the European Commission proposed to amend the current VAT Directive to delete the strict requirements for e-invoices and make e-invoices equivalent to paper invoices. The potential cost savings of these measures for the entire European Union have been estimated at more than 40 billion Euro.
Upside down
The proposal has been subject to continuous discussion last year by the Tax Departments of the 27 EU Member States. On March 16, 2010 they reached an agreement. In the current proposed article 233 the authenticity of the origin, the integrity of the content gets company with yet another requirement: the legibility of an invoice. These three main requirements are even extended to paper invoices. This is the world upside down compared to what the Commission originally proposed. The new rules also don’t prevent Member States not to impose additional conditions to paper invoices.
Harmonisation
The draft directive sets out to ensure the acceptance by tax authorities of e-invoices under the same conditions as for paper invoices, and to remove legal obstacles to the transmission and storage of e-invoices. It also allows e-invoicing to be implemented differently across member states. This could enhance differences between Member States and could cushion adoption of cross border e-invoicing unless service providers providers sufficient tools and service.
Current draft article 233
Article 233
1. The authenticity of the origin, the integrity of the content and the legibility of an invoice, whether in paper or in electronic form, shall be ensured from the point in time of issue until the end of the period for storage of the invoice.
Each taxable person shall determine the way to ensure the authenticity of the origin, the integrity of the content and the legibility of the invoice. This can be achieved by any business controls which create a reliable audit trail between an invoice and a supply.
“The authenticity of the origin” shall mean the assurance of the identity of the supplier or the issuer of the invoice.
“The integrity of the content” shall mean that the content required according to this Directive has not been altered.
2. Other than through the type of business controls described in the second subparagraph of paragraph 1, the following are examples of technologies that ensure the authenticity of the origin and the integrity of the content of an electronic invoice:
-by means of an advanced electronic signature within the meaning of point (2) of Article 2 of Directive 1999/93/EC of the European Parliament and of the Council of 13 December 1999 on a Community framework for electronic signatures, based on a qualified certificate and created by a secure signature creation device, within the meaning of points (6) and (10) of Article 2 of Directive 1999/93/EC.
-by means of electronic data interchange (EDI), as defined in Article 2 of Commission Recommendation 1994/820/EC of 19 October 1994 relating to the legal aspects of electronic data interchange, if the agreement relating to the exchange provides for the use of procedures guaranteeing the authenticity of the origin and integrity of the data.”
Carmen Ciciriello on 
Ranko Smokvina on 
This is a great shame. There is a great opportunity to get things right. The VAT authorities in Europe really ought to get real. It’s not as though they had the paper world sorted (think of the Carousel fraud scandal).
The draft dated 02-26-2010 was the following:
” (24) (Only as regards article 233):
“Article 233
1. An invoice shall be accepted by Member States provided that the issuer and the recipient of the invoice can establish, by means of appropriate business control processes, an audit trail between an invoice and a supply. The business control processes used shall ensure that invoices are authentic, remain integer and legible from issuance until the end of the storage invoice.
“The authenticity of the invoice” shall mean the assurance of the identity of the issuer of the invoice.
“The integrity of the content” shall mean that the content required according to this Directive has not been altered.
2. Where using electronic invoicing, the following are two examples of electronic procedures which taxable persons may use as part of their business control processes in order to ensure the authenticity and integrity of an electronic invoice.
-by means of an advanced electronic signature within the meaning of point (2) of Article 2 of Directive 1999/93/EC of the European Parliament and of the Council of 13 December 1999 on a Community framework for electronic signatures, based or not on a qualified certificate and created by a secure signature creation device, within the meaning of points (6) and (10) of Article 2 of Directive 1999/93/EC.
-by means of electronic data interchange (EDI), as defined in Article 2 of Commission Recommendation 1994/820/EC of 19 October 1994 relating to the legal aspects of electronic data interchange, if the agreement relating to the exchange provides for the use of procedures guaranteeing the authenticity of the origin and integrity of the data.